April, 2018 Newsletter
Provided by Leimberg Information Services

“As a result of the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) 2018 provides a unique opportunity for you to make gifts using your federal estate, gift, and generation skipping transfer (“GST”) tax exemption (the basic exclusion amount) of $11.18 Million as reflected in Rev. Proc. 2018-18, issued March 2, 2018 (reduced by any prior use of such exemption).

Unless Congress takes action the increased basic exclusion amount will sunset on December 31, 2025 to $5 Million, as adjusted by the Consumer Price Index (“CPI”). As a result, if you miss the opportunity to use the increased basic exclusion amount prior to December 31, 2025 you may lose the ability to make significant tax-free gifts. Based upon the current estate and gift tax rate of 40%, the additional estate taxes that may result from not taking advantage of the increased basic exclusion amount of $11.18 Million before December 31, 2025 could be over $2.236 Million, or significantly more when appreciation on the gifted assets is taken into account.

Unlike in 2012, when taxpayers had only one year to plan for the possible loss of an increased gift tax exemption of $5 Million, there is no rush to make gifts in 2018. Although taxpayers have until December 31, 2025 to take advantage of the increased gift tax exemption, making gifts sooner rather than later will allow taxpayers to remove future appreciation of gifted assets from their estates. The following 6 Question 2018 Gift Suitability Analysis is provided to facilitate consideration of whether to make gifts in 2018 (or before January 1, 2026) using the current basic exclusion amount.”

Barry A. Nelson and Cassandra S. Nelson provide LISI members with a 6 Question Checklist to help determine the suitability and appropriateness of making major gifts in 2018 or thereafter based upon the increase of the basic exclusion amount to $11.18 Million. Members will find their commentary particularly helpful as it is written in the format of a letter to clients. Before we get to their commentary, this is LISI’s final webinar for the week: Cynthia D.M. Brown and Jocelyn M. Borowsky, Silent Trusts: “The Crossroads between the Duty to Inform and Report and the Option to Have a Silent Trust” Friday, March 23rd 3:00 PM - 4:00 PM EDT Click this link for more information.

As a result of the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) 2018 provides a unique opportunity for you to make gifts using your federal estate, gift, and generation skipping transfer (“GST”) tax exemption (the basic exclusion amount) of $11.18 Million as reflected in Rev. Proc. 2018-18, issued March 2, 2018 (reduced by any prior use of such exemption).

Unless Congress takes action the increased basic exclusion amount will sunset on December 31, 2025 to $5 Million, as adjusted by the Consumer Price Index (“CPI”). As a result, if you miss the opportunity to use the increased basic exclusion amount prior to December 31, 2025 you may lose the ability to make significant tax-free gifts. Based upon the current estate and gift tax rate of 40%, the additional estate taxes that may result from not taking advantage of the increased basic exclusion amount of $11.18 Million before December 31, 2025 could be over $2.236 Million, or significantly more when appreciation on the gifted assets is taken into account. Unlike in 2012, when taxpayers had only one year to plan for the possible loss of an increased gift tax exemption of $5 Million, there is no rush to make gifts in 2018. Although taxpayers have until December 31, 2025 to take advantage of the increased gift tax exemption, making gifts sooner rather than later will allow taxpayers to remove future appreciation of gifted assets from their estates. The following 6 Question 2018 Gift Suitability Analysis is provided to facilitate your consideration of whether to make gifts in 2018 (or before January 1, 2026) using the current basic exclusion amount.

All NAEPC-affiliated estate planning councils are eligible to receive a discounted subscription rate to the Leimberg LISI service. Please see more information about the offering. You may also contact your local council office / board member to find out whether they are offering the service as a member benefit.

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